21.20 That's where we leave our Live Blog for today. Thanks for reading. We will be back tomorrow.

US markets close

21.17 The Dow has closed down 1.2pc, the S&P 500 down 1pc and the Nasdaq down 1.1pc.

BREAKING: Facebook investors like its results

21.15 Facebook shares have jumped 6pc after announcing revenues of $2.59bn and earnings per share of $0.31 in its fourth quarter. Analysts had expected the company to earn $0.27 on revenues of $2.33bn.

Fed cuts QE by $10bn

20.45 According to a Gallup poll, 40pc of Americans approve of what Ben Bernanke has done as chairman of the Federal Reserve, with 25pc offering no opinion.

20.10 Incidentally, this was the first Fed meeting since June 2011 that the FOMC was unanimous.

19.57 The iShares MSCI Emerging Markets Index exchange-traded fund has fallen to a five-month low after he Fed's move.

19.51 For more reaction from the financial sector on the Fed's decision, click here. And for a look at how the Fed has changed its view of the US economy, click here.

19.46 Millan Mulraine, deputy head of US research and strategy at TD Securities:

The apparent absence of any concern about the recent turmoil in emerging markets and possible feedback to the US economy was reflected in the unchanged growth and labour market assessment. In particular, the Fed continues to see the risks as 'more nearly balanced', which is a reaffirmation of the view expressed at the December meeting when tapering was launched. In fact, they reinforced their optimistic outlook for growth, noting that they expect 'economic activity will pick up at a moderate pace'. In a glaring departure from the past few years, the policy decision was unanimous among voters - with even Kocherlakota, who argued against tapering last month, voting in favour of a further cut. The bottom line here is simply that the Fed continues to have full confidence in the US economic recovery, and their decision to stick to their tapering agenda suggests that they are looking through the recent weak tone in the data. Given this, we continue to expect the Fed to maintain this tapering pace, with a further $10bn cut at each meeting in the coming months, ending the program by Q4 this year.

19.32 Here is the Dow today, showing a sharp sell-off after the Fed's QE decision:

Bernanke’s decision to dial back quantitative easing by another $10bn leaves the departing chairman’s successor a clear direction. His final bow at today’s Federal Open Market Committee left the bar high for any future deviations from his current tapering trajectory, and the committee’s forward rate guidance made no change to the unemployment threshold.

"The withdrawal of Fed liquidity is expected to impact emerging markets, and outflows are likely to put continued pressure on currency, fixed income and equity markets. In the US, real yields should resume their ascent and the dollar should strengthen while equity markets could suffer. Investors should be cautious of the tightening financial conditions as they present a considerable headwind to US economic growth in the first half of the year.

19.13 Dow has fallen 170 points today, drop has accelerated since Fed cut QE. This is because if the Fed is pumping less money into the financial system, there is less money to put into the stock market.

The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.

Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated.

QE or not QE?

18.29 Just over half an hour until Ben Bernanke's meeting. Most analysts expect the Federal Reserve to taper its massive QE programme by a further $10bn a month.

The central bank announced last month it would cut monthly bond buying to $75bn from $85bn.

Since the collapse of Lehman Brothers, Sainsbury’s has been the best performing major supermarket group in the UK... The icing on the cake was Sainsbury’s sponsorship of the Paralympic Games in London and emerging from the horse meat scandal without being tarnished. This has left the Sainsbury’s brand as strong – and as differentiated – as ever.

17.00 Untaxed transactions in Spain have surged to equal nearly a quarter of the country's output as unemployed workers scrape a living in the black economy.

Cash transactions carried out behind the taxman's back in 2012 hit nearly €253bn, or 24.6pc of gross domestic product, according to the report released by GESTHA, a tax inspectors' union.

'Emerging market outlook still positive in the long term'

16.38 Julian Mayo, co-chief investment officer at Charlemagne Capital UK, is still upbeat about the long-term prospects of emerging markets.

In the short term it means domestic demand takes a hit, that GDP growth is going to be quite a lot lower than some analysts are forecasting. But then a boost from cheaper exports will take hold quickly. In the long term this is a positive thing.

He notes that the debt to GDP ratio in the emerging markets is far lower than those in the developed economies. "In an environment where interest rates are normalising, would you rather be lending to a country growing at four to five per cent with around 170pc debt to GDP or one growing at one to two per cent with twice the debt?"

European markets end the day in the red

16.07 Having started the day with a rise, bourses across Europe are set to see out the day down sharply after sentiment turned jittery around midday in the run-up to the Federal Reserve's policy announcement later this evening.

The Fed trimmed its purchases by $10bn to $75bn in January and traders expect Bernanke to announce a further reduction today - removing more vodka from the punch bowl.

FTSE 100

The FTSE 100 is set to end the day down 0.7pc. Source: Bloomberg

Germany's Dax has fallen 0.97pc today. Source: Bloomberg

French Cac index is down 0.93pc. Source: Bloomberg

Time for capital controls?

15.39 It's not just the South African rand which is suffering today. The Turkish lira is back down to yesterday's levels - rendering the central bank's overnight bumper rate rise virtually ineffective.

Analysts have started talking about the prospect of capital controls as a more muscular method of stemming outflows. Michael Hewson of CMC Markets said:

Certainly a bit of shock and awe on the rate hike but you do have to wonder, if this doesn't work in arresting the decline in the lira, what other measures the Turkish central bank has?

Do you jack up rates again? ... My big concern is they start talking about capital controls.

Kathleen Brooks at Forex.com earlier said:

If there is another sell off it seems unlikely that Turkey can continue to raise rates by 425 basis points a pop without causing extreme economic hardship. Thus, if we see another sell-off and fresh record lows in the TRY, the CBOT may have to consider more radical options including capital controls, which could make this crisis worse.

Source: Bloomberg

Market dissatisfied with South Africa rate rise

15.22 Analysts have cast their verdicts and the overriding feeling is that South Africa's 50 basis point to 5.5pc rise did not go far enough - especially in comparison to Turkey's bold 425 rate hike to 12pc.

Paul Chakaduka, trader at Global Trader said:

Look at Turkey, where they increased interest rates by, call it 400 or 500 basis points, and we only increased it by 50 basis points. The market feels that this hike is not sufficient and is not on par with the rest of emerging markets.

The rand could still remain under pressure as long as people feel that they are not getting the right bank by moving the money into rand.

Isaac Matshego, economist at Nedbank, interpreted the move as a "preemptive strike" rather than the beginning of a rate rise cycle:

If the move was primarily aimed at supporting the rand, they would have to move a lot more aggressively. Turkey hiked by more than 400 basis points because of the very weak currency.

In this case it seems that the Reserve Bank is sending a preemptive strike. Our view at this stage is not that this is the beginning of a series of hikes.

South Africa interest rate rise backfires

15.13 The South African rand initially rose in reaction to the rate rise but swiftly fell to its lowest in more than five years following the 50 basis point rate rise by the central bank this afternoon.

Kathleen Brooks, research director at Forec.com, warned that central bank action is unlikely to reverse capital outflows from emerging markets in the long-term:

Central bank action has not dealt with the long-term issues and they remain as risky as they were before

Rand v US dollar over last three days. Source: Bloomberg

Dow tumbles at the open

14.39 The Dow Jones has opened down by more than 170 points - or 1pc - at one stage amid speculation about the Federal Reserve's next stimulus move.

The fall comes against the backdrop of jitters in the emerging markets after aggressive interest rate rises by the Turkish and South African central banks failed to stop capital flight.

Carney at news conference

14.32 Mark Carney is giving few other details at a news conference.

When asked if he would be able to make a union work, he said the Bank of England would implement arrangements decided “to the best of our ability”.

14.25 Finance Secretary John Swinney said the Scottish government “welcomes” Carney’s confirmation that the Bank of England will implement monetary arrangements decided by the Bank of England.

As he made clear, he was not making the case for or against Scotland’s independence, which is for the people of Scotland to decide, or for or against a currency union, which will be a matter for agreement between the Scottish and UK Governments. The benefits of a currency union are clear for both sides in terms of issues like promoting investment, eliminating transaction costs, reducing borrowing costs and facilitating the movement of labour and capital, and we welcome the Governor’s recognition of these benefits.

“Ultimately, as Mr Carney makes clear, a Sterling area is a matter for the two Governments to agree. Such a shared currency area is the common sense position as it is in the overwhelming economic interests of both Scotland and the rest of the UK.

“An independent Scotland will control 100 per cent of our own revenues, compared to the seven per cent of our tax base we are currently responsible for under devolution. A shared currency will mean an independent Scotland having control of tax policy, employment policy, social security policy, oil and gas revenues, immigration policy and a range of other levers to suit our own circumstances, helping to grow our economy, create jobs and secure a more prosperous and fairer society", he says.

Darling on what would happen to Scotland without the pound

The Governor’s speech quietly demolishes Alex Salmond’s claim that Scotland could keep the UK pound after leaving the UK. The nationalists cannot continue to make false promises on currency when it is so obvious that leaving the UK means losing the UK pound. People realise that independence is too big a risk to take. The fact that Alex Salmond won’t even tell us what money will be in our pocket or purse after leaving the UK is the most obvious example of that.

Darling says that no pound would mean no credit rating for Scotland, which would mean “higher cost of living with higher mortgage repayments, higher credit card and store card bills and more costly car loans.”

He spells out further consequences for Scotland.

It would mean fewer jobs due to the cost of changing money every time Scottish firms buy or sell from our biggest customer – the rest of the United Kingdom. It means higher taxes as the Scottish Government pays more to borrow money meaning more debt. And it means bigger risks for our economy. The total bailout of RBS by UK taxpayers was twice the size of the entire Scottish economy. If I had been chancellor of an independent Scotland and did not have the back-up of the rest of the UK Scottish banks would have gone under and families would have lost everything.

More reaction to Carney’s speech

When it comes to sharing the pound Alex Salmond has repeatedly claimed a separate Scotland could have its cake and eat it. That under independence, the country could have a currency union with the rest of the UK but still have total fiscal control over tax and spending. Now, the governor of the Bank of England has blown this assertion right out of the water, leaving Alex Salmond’s currency plans in tatters.

"He concludes that one of the main lessons to draw from the Eurozone crisis is that to have a durable, successful currency union requires some ceding of national sovereignty. Alex Salmond’s kneejerk reaction when he hears something he doesn’t like is to simply dismiss it out of hand, but he cannot ignore the views of the governor of the Bank of England. This is a crushing blow for the SNP’s plans to keep the pound, making it even more incredible that they haven’t come up with a currency plan B.

“Even senior figures within the Yes campaign don’t think a currency union would be possible under independence. Alex Salmond is becoming more and more isolated on this key issue by the day.

"Mr Carney also made it clear in his speech today that in the event of a currency union, the creation of a border between a separate Scotland and the rest of the UK could influence the flow of trade. Given the vast majority of Scotland’s trade is within the UK, this is the one of the clearest signals yet that if we allow the SNP to create a barrier with the rest of the nations in the UK it would severely impact Scotland’s economy.”

Mark Carney took a few questions before wrapping up

14.09 When asked when he’ll return to Scotland he said “whenever you’ll have me”.

At the latest, he said he’s “looking forward” to the Commonwealth Games.

“You’ll be sick of seeing me and the Bank of England, but we’ll be up”, he said.

Mark Carney also said there’s a sustainable rate of consumer spending, but slower than rate we’ve seen.

Investment news a little better though, and Carney said we’re starting to see some pick up in the figures.

Treasury says currency union would be "highly unlikely"

14.00 Following Mark Carney's speech, a Treasury spokesman has said currency union is unlikely and Scotland needs a "Plan B".

As the Chancellor has previously said, the current arrangements of a full, monetary, fiscal and political union bring economic benefits to all parts of the UK. Governor Carney today highlights the principled difficulties of entering a currency union: losing national sovereignty, practical risks of financial instability and having to provide fiscal support to bail out another country. This is why the UK Government have consistently said that in the event of independence, a currency union is highly unlikely to be agreed. The Scottish Government needs a Plan B.

Scotland must cede sovereignty to keep pound

13.53 A formal currency union would be a matter for the Scottish and UK Parliaments, says Carney.

But the risks of a union have been “clearly demonstrated in the euro area”.

“A durable, successful currency union requires some ceding of national sovereignty", he says.

Ben Riley-Smith says these comments will be disappointing to First Minister Alex Salmond.

Scotland would need a common fiscal backdrop

13.47 The current Scotland-UK banking union is based on a single supervisor, single deposit guarantee scheme backed back central government, and a common central bank.

“An independent Scotland would need to consider carefully how to develop arrangements with the continuing UK that are both consistent with its sovereignty and sufficient to remain stability", says Carney.

South Africa raises interest rates

13.40 South Africa has raised interest rates to 5.5pc from 5pc in a surprise move following a tightening of monetary policy in Turkey overnight.

What makes a strong currency area?

13.38 The success of a currency area is based on whether “its features mitigate the costs” of the flexibility that comes from independence, says Carney.

“The similarity of the industrial structure of the UK depends on how offshore oil is allocated.” Per capita, they would be very similar, but geographic, not at all.

Financial union a parliamentary decision

13.31 Any arrangement to retain sterling in an independent Scotland would be negotiated between Westminster and Scottish parliaments, says Mr Carney.

His speech is a “technocratic assessment" and will not “pass judgement on the relative merits of the different currency options for an independent Scotland.

13.28 Mark Carney says when the time comes to increase interest rates, any change will be gradual.

A few quarters of growth driven by household spending are a good start, they’re not sufficient, he says.

“The recovery has some way to run before it would be appropriate to consider moving away from the emergency setting of monetary policy.”

Mark Carney begins speech in Scotland

13.08 Mark Carney, Governor of the Bank of England, is due to being his speech hosted by The Scottish Council of Development and Industry at 1.15pm.

The speech is scheduled to last an hour, and will be followed by a Q&A. It is the first time Mr Carney has commented on the debate over Scottish independence. Whether or not Scotland would be able to keep the pound if it became independent is a major issue in the referendum debate.

The Bank of England is streaming the speech live, for all those who want to watch.

Google close to settling EU antitrust investigation

12.30 A years-long EU investigation into accusations that Google used its dominant search engine to promote its other services at the expense of rivals is set to draw to a close, Reuters is reporting.

The news agency says the company has improved the concessions it is willing to offer, as it attempts to avoid a fine that could run into the billions of pounds.

Google has previously made offers such as prominently displaying rivals' services, for example maps, shopping and price comparison, and making it easier for advertisers to switch to rival services.

Banks win concession on EU's 'Volcker rule'

11.30 Plans to make banks cut down on proprietary trading - playing with their own assets - have been unveiled by the EU - its version of the US Volcker rule.

Here's an extract of the EU statement:

The new rules would also give supervisors the power to require those banks to separate certain potentially risky trading activities from their deposit-taking business if the pursuit of such activities compromises financial stability.

Alongside this proposal, the Commission has adopted accompanying measures aimed at increasing transparency of certain transactions in the shadow banking sector.

The rules have been watered down after pressure from France and Germany, according to critics of the legislation. Reuters reports the German lawmaker Sven Giegold as calling the laws "bureacratic and ineffective".

Rather than saying certain types of business should be separated, there are loads of exceptions. [European Commissioner Michel] Barnier couldn't bring himself to go up against France and Germany.

Turkish lira falling again

10.50 The Turkish lira was boosted by last night's shock interest rate jump, but some of the excitement has faded away this morning, showing that the central bank's success in strengthening the lira may be short lived.

The graph below shows the lira's movements in the last five days. The big spike and subsequent fall follows last night's decision.

Bloomberg

FTSE round-up: Sainsbury's biggest faller, miners on the up

10.00 In the stock markets today, the FTSE 100 is up 0.64pc, or 42 points, at 6,615, driven higher by mining groups Antofagasta, Anglo American and Fresnillo.

After the news that Justin King is stepping down, Sainsbury's is down 2.1pc, the biggest faller amoung London's top index. The mid-cap FTSE 250 is up 1pc.

Both Antofagasta and Anglo American have published well-received production updates this morning.

Sainsbury's chief executive steps down

09.10 Sainsbury's says Mr King will leave after the company's annual meeting on July 9.

Here's Mr King's statement:

This was not an easy decision for me to make, and in truth it will never feel like the right time to leave a company like Sainsbury's. It has been a privilege to have led the Company for the past 10 years and I am incredibly proud of our achievements in that time.

It is the 157,000 colleagues that make Sainsbury's so special and I would like to thank them for their amazing efforts over the last decade in making Sainsbury's great again. I am confident that under Mike's leadership the business will go from strength to strength."

Here's what's happened to the shares after the announcement - now recovering

Image: Google Finance

09.05 BREAKING: Sainsbury's has just announced that Justin King, the retailer's chief executive of 10 years, will step down in July to be replaced by group commercial officer Mike Coupe.

Shares have fallen by 3pc immediately following the news.

Corporate round-up: Mulberry profit warning, Shell sells Brazil stake

08.30 Here's what you need to know about Britain's biggest companies this morning:

• Mulberry shares have fallen a whopping 24pc after the luxury brand issued a profit warning. It says "the trading environment in the UK has deteriorated over the period and in the wholesale channel the Korean market has been significantly more challenging than anticipated.

• Helicopter maker AgustaWestland has secured 1,000 jobs after being awarded to contracts worth £760m from the Ministry of Defence (link)

• Shell has sold a 23pc interest in a Brazilian offshore project Parque das Conchas to Qatar's state oil company for $1bn.

• Carphone Warehouse has signed an agreement with the Korean manufacturer Samsung to operate 60 Samsung stores across Europe.

• Nintendo has announced an 11.5pc fall in revenue in the October to December quarter, despite the launch of its Wii U video games console.

House prices rise 8.8pc in January, most for 45 months

08.00 House prices were up 8.8pc in January on a year earlier, the biggest annual rise since April 2010, according to new data from Nationwide. This is despite January being the first month that the Bank of England's Funding for Lending Scheme does not apply to mortgages.

Prices remain 4pc off their 2007 peak.

<noframes>Interactive chart: House prices since 2007</noframes>

Robert Gardner, Nationwide's chief economist, said there had been an encouraging pickup in first-time buyers in recent months, accounting for around 44pc of activity in the third quarter of 2013.

He said:

First time buyers are the lifeblood of the housing market. As well as accounting for a significant proportion of housing transactions (historically around 40pc of transactions involving a mortgage), they also play an important role in the wider market, for example in helping to complete chains, enabling those that already own a property to move.

For this reason, it is particularly encouraging that first time buyer numbers have been rising strongly in recent quarters. Indeed, at 73,700 in Q3 2013, they were up 32pc compared with the same period in 2012 and accounted for around 44pc of activity – close to an all-time high as a share of lending activity.

Markets buoyed by Turkey central bank decision

07.30 Markets are surfing a wave of optimism this morning after the Turkish central bank unexpectedly raised rates from 7.75pc to 12pc, a desperate attempt to prevent a capital flight from the country which has driven down the value of the lira.

Turkey is in the latest country in the eye of the storm, no longer able to draw in enough foreign capital to cover a current account deficit of 7.5pc of GDP. Reserves have fallen to wafer-thin level of six weeks’ import cover.

The ruling Islamic movement of Recep Tayyip Erdogan is deeply split, while the country faces mounting Sunni-Shia tensions due to a spillover from Syria. The global chain reaction resembles what happened in the East Asia crisis in 1997-1998 when domino effects swept the region.

However, this time contagion is ricocheting between countries with large current account deficits or political crises wherever they are, while stronger economies such as Mexico are mostly spared.

What's on today: Mark Carney to speak in Edinburgh, Federal Reserve expected to taper further

07.15 A bit of a back-loaded day today, but it should make for an interesting afternoon.

• At 13.15, TheGovernor of the Bank of England, Mark Carney, will set out his views on Scottish independence at a speech in Edinburgh • At 14.15, Lawrence Tomlinson, the millionaire businessmanwho accused Royal Bank of Scotland of "killing off" small firms by forcing good companies out of business for the lender's profit, will be questioned by the Treasury Select Committee on banks' lending practices. • At 19.00, we'll have the latest decision from the Federal Reserve on whether it will slow its quantitative easing programme. In Ben Bernanke's final meeting, the Fed is expected to slow bond purchases from $75bn to $65bn. • And at around 21.00, Facebook releases fourth-quarter results.

Top stories in today's Telegraph

07.10 Here's what's leading the business pages of today's Daily Telegraph